Same-sex couple file jointly on federal return

Associated Press file
Ellen Toplin, right, and Charlene Kurland are among the 170 couples who received marriage licenses in Montgomery County in July from a renegade register of wills. Although they can file a joint federal return this year, the state has a constitutional ban on same-sex marriage.

In addition to the joys of the ceremony, the honeymoon and setting up a household, some gay and lesbian couples in Pennsylvania will share another responsibility of marriage - filing joint taxes.

Some same-sex couples in Pennsylvania will be able to file jointly on their federal tax returns. Financially, the option of filing jointly offers a direct financial benefit to couples. In the vast majority of cases, a couple reduces their tax liability by filing jointly.

While same-sex marriage is illegal in Pennsylvania, some Keystone State same-sex couples will have the option of filing joint federal tax returns. For example, couples married in the 17 states or District of Columbia which have same-sex marriage who then moved to Pennsylvania may do so. That group would also include Pennsylvania residents who traveled out-of-state specifically to be married. They didn't have to go far, since New York, New Jersey and Maryland offer same-sex marriage.

"If Joe and John got married in New York, for example, and are Pennsylvania residents, they may file joint federal tax returns," said David Glusman, of the Philadelphia office of Marcum Accountants & Advisers, and part of the firm's LGBT and Non-Traditional Family Practice Group. "The IRS is following the Supreme Court decision."

Mr. Glusman referred to the United States v. Windsor decision striking down several provisions of the federal Defense of Marriage Act which defined marriage as between a man and a woman. His phone rang "off the hook" after the Windsor decision was handed down as clients looked for financial guidance in a new era.

Unknown number

No one knows for sure how many lawfully-married same-sex couples reside in Pennsylvania.

"There is no number someone can point to," said Ted Martin, executive director of Equality Pennsylvania, a group promoting equal rights for gay, lesbian and transgender people, on the number couples affected by Windsor as it regards taxes.

In addition to those who left the state to get married or moved into the state after getting married, there are the "Montgomery County 170" - the couples who received marriage licenses from renegade register of wills D. Bruce Hanes. Convinced that Pennsylvania's prohibition on same-sex marriage violated the U.S. Constitution, Mr. Hanes issued more than 170 marriage licenses in a six-week period to same-sex couples until a court stopped him from doing so. The case is one of several challenging the state's marriage ban. So far, no one has challenged the status of the couples. So those who went onto marry, are still recognized as married, Mr. Glusman said.

Money at stake

About 90 percent of the time, married couples see a financial benefit by filing a joint federal tax return, Mr. Glusman said. Whether filing jointly is an advantage depends on the relative incomes of each spouse and which one can claim certain deductions. A tax or financial professional can figure out the better move with relative ease.

Also, those couples may want to consider amending their tax returns back to the year of their marriage. The IRS allows people to amend their taxes as many as three years back.

"There will be no net cost to same-sex state filers - save for the aggravation," Mr. Glusman said.

That's part of the problem with Pennsylvania law not recognizing same-sex marriage, said Mr. Martin. He and his spouse, who were married in California, will file as married on federal returns but as "legal strangers" on state returns.

"Beyond being offensive, it's time-consuming and costly," he said.

Pennsylvania's failure to recognize same-sex marriage exposes some couples to a range of other financial burdens beyond income taxes, Mr. Glusman said. Spouses are exempt from the real estate transfer tax in Pennsylvania. If John buys a house in Pennsylvania and later marries Richard in New York, and wants to put Richard's name on the deed, they will have to pay a real estate transfer tax - usually several thousands of dollars on a $100,000 home. The state treats Richard as an unrelated stranger.

"If Pennsylvania is not recognizing your marriage, then it probably will not recognize an spousal exemption from real estate taxes or other taxes," he said.

The other big financial hit to same-sex couples could be estate taxes.

If John dies, he can leave his assets to Richard, and, as a spouse, Richard will be exempt from federal estate taxes, as per the Windsor ruling. Pennsylvania also exempts the surviving spouse from estate taxes, but since the state doesn't acknowledge John and Richard's marriage, it will hit Richard with a 15 percent tax, Mr. Glasman said.

There are ways to avoid that through trusts, wills, and other moves, but those steps requires planning and professional advice.

"People celebrated the Windsor decision, but there remains a group of other considerations that same-sex couples don't think through, but are going to have to at some point," he said.

Contact the writer: dfalchek@timesshamrock.com

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